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Section C question on discounted cash flow. Were we suppose to include marketing cost in the calculation on npv?
The multiple choice were so difficult. It was all about p/e business valuation and foreign currency ? section C was profitability index risk,uncertainty and investment projects. Gutted
I found this exam very challenging. Probably the most challenging of the applied skills for me. I also found Section A and B very very tough. I flagged almost all of section A and came back to them.
Had a really strange TERP question and I can easily do these, but I just could not get any of the 4 potential answers.
Hopefully Section C may help me get over the line. Got NPV and WACC.I founf the multiple choice in sectin A and B most difficult. The majority of section A questions asked which 2 or 3 are correct. Unfair these are so frequent given the 2 marks are only awarded if the entire answer is correct.
Same here. I really took my time to prepare for this exam. Very disappointed how tricky they made it. Hardest exam for me as well.
Acca should give us the results for the multiple choice immediately so we have enough time to prepare to resit. Looks like I’m going to have to go through the text book again.
I also found sections A and B hard, I had so many flagged which isn’t usually the case on those sections. For section C I had a 10 mark on WACC and 10 mark on dividend policy (what did people put for this question?) Other section C was 6 marks on NPV (really not sure but I think I got around 100k for this), 6 marks on capital rationing. I did the PI for each and I think I put that about 13% of the lowest ranked project could be used. Then 8 marks on four techniques re risk and uncertainty and I wrote about sensitivity analysis, increasing the discount rate, risk reduced payback period and simulation.
Oh yes, this one with the TERP was really tricky and difficult, as it you had to go backwards from it (from value of the rights per existing share).
Section C was NPV & Capital rationing (non-divisible) and there was one really tricky sensence, that made me re-do the whole part – It was something like “The projects can be funded downwards, but not upwards” – how did you all embrase this, I was really shocked?
The other question was pure WACC and dividend policies – here the most notable part was, that the company was actually really highly geared and although the consistent growth of her dividends throughout the years – it should not cut them off a little bit and retain some cash for repayments. Also explanation of all the dividend policies (the M&M irrelevant theory, the signalling effect and so on.) and comments were required, I think.
Section B was Business valuation (I think I messed this one a lot, especially the divident growth valuation), Hedging & Interest rate Forward and I forgot the 3rd case.
Section A was the most difficult part, if you ask me. It consisted everything and it was quite tricky and difficult. There were questions, which I saw for first time and never thought they could examine you on this.
Hope to pass anyway, I gave all my best, especially on Section C, where I wrote as hell and hoping to get most of the points.Ravi wrote:Section C question on discounted cash flow. Were we suppose to include marketing cost in the calculation on npv?
I think it was just the additional ones in Y2 and Y3. The first part was sunk.
I prepared for this exam too and still found it extremely difficult. This was my third attempt and I am looking at another resit. Is this a fundraising strategy by ACCA? The more students fail the more money to resit and resite again and again. Who’s getting the money? ACCA! That’s what I think. Yes I am very frustrated.
Damn, I excluded both 🙁 . I thought marketing campaign costs were also sunk ones and not directly attributable to the project.
Evo9 wrote:
Section C was NPV & Capital rationing (non-divisible) and there was one really tricky sensence, that made me re-do the whole part – It was something like “The projects can be funded downwards, but not upwards” – how did you all embrase this, I was really shocked?.I took this as though they were divisible. It was worded weirdly. I think it said that the projects can be “downscaled” which I think would mean that they are divisible.
There were lots of questions in this exam that were structured in a way that I hadn’t seen in past papers. I spent too much time on section A because of this and was tight for time at the end.
I included the marketing cost but excluded the development cost (as I took it to be a sunk cost) but I have no idea if that’s right or not
I also got a npv question I don’t remember seeing a Marketing cost unless you had a different npv. Was it to do with some sport or something like that.
Section A& B were tricky as expected. I had to guess a few to keep time. C wasn’t too bad, Risk and Uncertainty. Early Settlement Disc and Factoring. I gave it my best shot and hopefully that will suffice. No I can get back to my life…my apt has past papers everywhere.Lol
Anyone get the question about what gives the most accurate IRR using any two discount factors – 10,15,20 and 25 per cent. Which discount factors is the answer ?
Yes the questions were tricky and not sure of the outcome. The bpp revision kits seem more effective and gives a good mix of tricky questions. .
Yeah I think it was 19 I used the highest 25 n 10 as the lowest n then done the irr formula
I ignored the marketing cost of 50m as a sunk cost but included the other research costs which hadnt been incurred?
Did you get the TERP asking for TERP and rights issue price? I got one where i put £5.40 and £6.60 as TERP but my calculations got me £6.68 as TERP so i assumed they rounded but God knows lol
Yeah i got the exact same section c questions. My WACC was 13% in the end but that 10 mark on divi policy really stunned me! I had no idea what to write so just blabbed stuff and then started talking about capm and the theories, i.w traditional and modigliani and miller but it was a tough question and not one i had seen before in any past papers! NPV and cap rationing was ok. Did you get the four techniques ques on risk and uncertainty? I put Payback period, sensitivty analysis, probablity analysis and capm.
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